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New era - Algeria brings industrial sector up to date

Sunday, 09 May 2010 16:09

The industry occupies a crucial position in the Algerian economy. From the early years of its independence, Algeria has given priority to the implementation of a varied public industrial basis for which production was exclusively aimed at the internal market.

The liberation of the Algerian economy, starting in the early 1990s, meant public business was faced with competitive situations it was not prepared for it.

At this same time, the private industrial sector started to develop thanks to a new legislative and regulatory system namely implemented by law n°88-25 of 12 July 1988 regarding the orientation of private national economic investments

Today, the private industrial sector’s contribution to the national industrial production is around 35%.

Even though it has lost significant shares on the internal market, the Algerian industry has a solid infrastructure, although this requires restructuring with a view to globalisation.

In terms of relaunching the national industry, the agenda of the Ministry for Industry and Investment Promotion follows on from focus-points arising from the document on “Strategy and policies for industrial relaunching and development”.

This document was subjected to a major debate between the different economic and. It constitutes sectional projection social actors during the National Industry conferences of the Algerian economic growth strategy.

Algeria’s new industrial strategy is based on the four main axes below:
- Choosing sectors to be promoted
- Sectional restructuring of the industry
- Spatial restructuring of the industry
- Industrial development policies

The sectors to be promoted are chosen in several major stages involving:

- Identification of the branches displaying strong developmental potential and which are driven by the international market;

- Analysis of the level of competitiveness of the branches identified; Assessment the strengths and weaknesses of the targeted branches, as well as the threats and opportunities on the international market;

- Stating of the industrial strategy retained from these successive choices and outlining of the elements for its implementation.

The sectional restructuring of the industry will take place according to the choices retained by the industrial strategy and which call for action on three additional plans: development of natural resources, densification of industrial material and promotion of new industries.

- The development of natural resources – The sought-after aim is to promote the industries which will allow Algeria to make better use of its natural assets and to go from being a simple exporter of primary products to a producer and exporter of converted goods, with more advanced technology and higher added value. The branches identified at this level particularly concern petrochemistry, synthetic fibres, fertilisers, steel industry, non-ferrous metallurgy (aluminium) and construction materials (hydraulic binders)

- Densification of industrial material – This involves encouraging the industries which contribute to the integration of activities currently placed in the latter stages of the production chain. The industries likely to favour this increase in channels are those generally associated with assembly and packaging: electrical and electronic industries, pharmaceutical and veterinary industries, agro-food industries, equipment industries.

- Promotion of new industries – Particular attention will be given to the promotion of industries which are either non-existent (new industries) or those in which Algeria is lacking progress. This especially involves industries associated with ICT and automobiles.

The spatial restructuring of the industry, the second dimension of industrial restructuring, can no longer be restricted to the current configuration of industrial areas and must adhere to a more modern vision and more productive ideas, such as the areas of integrated industrial development (ZDII), science and technology parks or specialised areas.

Some of these spaces have been located and will be implemented gradually.

- Their development will allow synergies to be created by making use of the spatial concentration of economic activities and by networking the businesses, the public regulation establishments, as well as the research, training and assessment structures.

- Thanks to the synergies which will this be created, these new spaces will generate a real microclimate of business and intensify investments.
The industrial development policies cover four main areas: upgrading of businesses, innovation, development of human resources and promotion of direct foreign investments:

- The upgrading of businesses is the focus of a business modernisation programme whose objectives and management methods lie within the industrialisation strategy.

- Innovation and creation of ideas are today the driving force behind the development. An endogenous innovation system must encourage the development of the Algerian industrial sector. However, this process, which will not be able to be guaranteed by the mere market dynamics, requires the involvement of public authorities. A national innovation system (SNI) will be established and implemented to uphold a policy of promotion and development of technical advancement.

- The development of human resources and qualifications is one of the main focuses of the industrial strategy which believes that human capital is not only a production factor just like physical capital, but also a powerful factor benefiting the assumption of technologies and industrial modernisation.

- The promotion of direct foreign investments (IDE) adheres to a policy aiming to mobilise external contributions while orienting them towards the financing of activities with high capital intensity and the spreading of new technologies.

- Thanks to the various external economies they generate (technology, organisation, managerial practices, enlargement of openings into the international markets), the IDEs play and additional coaching role compared to the national investments. An active State policy is required to help the IDEs gain a foothold in industrial matters and the spreading of their external effects in favour of national businesses.

There are at least four reasons why its development requires an industrial strategy to be defined:

- The industry is a powerful factor for the structuring of the national economy. It allows the technical progress and innovation to be both spread and created.

- The industry allows businesses and the nation to increase their competitiveness and negotiation power. It is the best means of integration into the world economy.

- The industrialisation process not only depends on a perfect knowledge of the procedures and the benefits associated with their promotion, but also on a large set of assistance and incentive policies.

- Today, this process cannot be conducted on the market alone, and certainly less on the world market, which is hardly competitive and largely bears the features of an oligopoly. Nor can it be entrusted to the State alone, as the state management does not ensure optimum allocation of resources.

Global Arab Network

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